CANYON TECH VENTURES UKRAINE TECHNOLOGY FUND Canyon Ventures: Canyon Tech Venture Investor Presentation January 2015

UKRAINE TECHNOLOGY FUND

CANYON TECH

VENTURESCanyon Ventures: Canyon Tech VentureInvestor PresentationJanuary 2015


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INVESTMENT THESIS

• Canyon Ventures (CV) plans to launch Canyon Tech Ventures (CTV) a Ukraine-focused technology fund which seeks superior risk adjusted return through direct investment in fast growing export-oriented companies in Ukraine’s IT sector during their Series A (Growth stage) and Series B (Expansion stage) funding rounds.

• Despite the overall crisis in the Ukrainian economy, the IT sector has continued to post double digit growth, capitalizing on the superior education system which graduates over 15,000 IT professionals annually. The existing Ukrainian IT sector employs over 50,000 professionals and is valued at over $5bln annually.

• Technology companies based in Ukraine have been able to leverage the internet and technology to create business models which allow them to sell to an international market.

• Recent geo-political instability has reduced the amount of investment and growth capital available to Ukrainian IT firms, despite the continued revenue growth from international consumers.


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UKRAINIAN I.T. SECTOR CONTINUING STRONG GROWTHI.T. MARKET FUNDAMENTALS

• Over 1500 I.T. companies

• Over 50 000 I.T. professionals

• Over USD 5B in combined revenues for outsource, e-commerce and product companies

• 25% CAGR over 2009 – 2013

• #1 in Central and Eastern Europe by number of developers and service volume

• Top 5 strongest software developers (Topcoder 1)

• Top 13 offshore outsource destination 2014 (AT. Kearney Global Services Location Index 2)

• Top 10 emerging market outsource destination 2014(Gartner 3) and top 30 in the world

• Top 10 most certified IT specialist in the world (Global IT IQ Report by BrainBench 4)

• Top 20 in IT Outsourcing and High-Tech services (Global Services 100 List, 2010)Technology remains a priority sector for the Ukrainian economy, defined by large population of low cost,

highly educated and experienced IT professionals


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UKRAINE KEY INFOCOUNTRY SNAPSHOT

Country size 603 700 sq. m.

Capital Kiev

Population 42,8 M

Labor Force 22 M

Literacy 99%

Annual number of graduates 600 000

Annual number of IT specialists graduates 16 000

Number of internet users 18,8 M

GDP per capita (WB, current $, 2013) 3900 USD

Unemployment 2014F, yoy 9%

CPI 2014F, yoy 22%

Nominal exchange rate, eop, USD 16,5 UAH

• # 1 European country by area size

• # 5 in Europe and #29 in the world by

population

• # 4 in the world by the number of people

with higher education

• #9 in Europe by number of internet users


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COMPELLING INVESTMENT FACTORSROOM TO GROW

In 1990, Ukraine’s economy was roughly the same as that of Poland, a country with a similar economy and social/political legacy. Since then, however, Poland has outperformed:

Most of the gulf can be attributed to the 1990s, a decade during which Ukraine’s economy shrank nine years out of ten.

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 20130

100

200

300

400

500

600

700

UA GDP PL GDP


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Ukraine Russia Poland Romania Turkey Kazakhstan Kenya Nigeria Argentina Greece Spain Columbia

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

But Ukraine CAN GROW. From 2000 – 2008, it was among the world’s fastest growing economy

GDP, 1990 - 2000 CAGR GDP 2000 - 2008 CAGR GDP, 1990 - 2013 CARG

COMPELLING INVESTMENT FACTORSROOM TO GROW

Source: World Bank and ESAM estimates


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REFORM PATH ADOPTED FOR 2015Anti-corruptionCreating National Agency and National Bureau to monitor and fight corruption

DeregulationReduction of state controlling structures from 56 to 28. Number of taxes cut down from 22 to 9.

DecentralizationTransfer authority from central to regional state agencies

Tax reductionSocial tax to cut down from 40% to 15%

EU integrationDevelopment and integration of 1500 national standards compatible with EU norms

National securityNATO cooperation and ultimate integration program

JusticeJudges validation, court and judicial system renovation. Law enforcement agencies, police force reforms.


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INTERNATIONAL SUPPORT

USA SUPPORT

• Ukraine Freedom Support Act is signed by US President on Dec 18, 2014

• $ 320M of funds committed in 2014

• $ 1B sovereign loan guarantee issued in May 2014

• $ 20M to support reforms in law enforcement and justice sectors is pending approval

• $ 45M to support defense and interoperability with U.S. Forces is requested additionally

INTERNATIONAL MONETARY FUND

• $ 17.3B stand by loan over 2 years program. $ 4.56B is disbursed in 2014

EUROPEAN UNION

• € 5B from the European Bank for Reconstruction and Development (EBRD);

• € 3B from the European Investment Bank (EIB);

• € 1.6B in macro financial assistance loans;

• € 1.6B technical assistance grants

In 2014 Ukraine received $ 9B of foreign financial support


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TOTAL INVESTMENT VOLUME

2010 2011 2012 2013 2014F0

10

20

30

40

50

60

70

80

90

20 22

44

80

40

2010 2011 2012 2013 2014F0

10

20

30

40

50

60

13

24

5157

47

2010 2011 2012 2013 2014F0

0.5

1

1.5

2

2.5

3

3.5

4

0.420.73

0.280.28 0.21

2.8

1.9

2.9

3.8

2.9

Seed Round A

TOTAL INVESTMENT VOLUME, MLN USD TOTAL NUMBER OF DEALS AVERAGE INVESTMENT, MLN USD

I.T. market in Ukraine is in early growth stage

Economy decline has very moderate impact on investment activity due to western focus most of the companies maintain


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NUMBER OF DEALS

2010 2011 2012 2013 2014F0

10

20

30

40

50

60

13

24

51

57

47

2010 2011 2012 2013 2014F0

10

20

30

40

50

60

70

80

90

20 22

44

80

40

Majority of deals, 95%, were allocated to early development stagesOnly few deals done for Round B

Rapidly growing companies need later stage capital to retain growth

Growth of incubators:****

SEED STAGE NUMBER OF DEALS ROUND A NUMBER OF DEALS


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CASE STUDY: POLISH MARKET

Poland Ukraine

Population 38 M 42 M

Labor force 18,53 M 22 M

GDP per capita (WB, current $, 2013) 13,648 3,900

Number of internet users 25,6 M 18,8 M

Number of IT companies over 11,000 over 1,500

IT firms revenues over USD 10 B over USD 5 B

Number of specialist in IT 75,000 50,000

Annual number of IT specialists graduates 20,000 16,000

VC/PE attractiveness index 2013 rank by IESE 28 69

MCI management

Founded 1999

Funds under management 5

AUM over 400 M

Geography CEE, CIS, DATCH

Industry IT Technology

Investment stage All stages

Total investments made 50

Total exits made 30

Current portfolio 33 companies

Total values of exits in 2014 over USD 27 M

Net IRR from 1991 23,8%

Country-to-country highlights MCI – oldest tech funds manager

Poland I.T. industry is a benchmark for Ukraine developmentPoland PE/VC activity outperforms Ukraine


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MCI FUNDS PERFORMANCE

MCI TechVentures Fund portfolio

Number of investees 8

Total value USD 98.8 M

Net IRR for last 12 months 17.40%

Net IRR for last 3 years 45%

MCI EuroVentures Fund portfolio

Number of investees 5

Total value USD 185,7 M

Net IRR for last 12 months 29,30%

Net IRR for last 3 years 67%

1999 2000 2001 2002 2004 2005 2006 2007 2008 20100.00%

50.00%

100.00%

150.00%

200.00%

250.00%

After entering EU

MCI INVESTEES IRR ON EXITS

MCI FUNDS INDICATORS

EU association and further membership fuels I.T .market performanceMSI funds, the oldest on the market, reflect market trend


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INVESTMENT PIPELINE

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Depositphotos is a microstock company; among the top five globally and the fastest growing company in its niche. Founded by Dmitry Sergeev in November 2009, the company has offices in US, Europe and Ukraine that provide customers with support in 15 languages. We expect Despositphotos to go public within the next 3-5 years www.depositphotos.com

Grammarly is a SaaS technology for spelling and grammar checking, with revenue of $10 million in 2012. Grammarly, improves communication among the world’s two billion-plus English writers. More than three million registered users worldwide trust Grammarly’s products, which are also licensed by more than 100 leading universities and corporations. www.grammarly.com

InvisibleCRM named “cool vendor” by Gartner Inc., provides tools engineered to increase user adoption and ROI of enterprise application by seamlessly integrating them into the way of business people work every day. Founded in 2006, the company today has more than 1000 customers and more than a million paid users across the globe. www.invisiblecrm.com

Jooble is a vertical job search engine that gives access to millions of jobs worldwide through a singles intuitive interface. The service operates in 59 countries, encompassing Europe, North America, Latin America and Asia. One of the world’s largest job search engines, Jooble now boast an audience in excess of one million job seekers per day. www.jooble.org

MacPaw, a Mac software company located in Kyiv, develops innovative software and information technology solutions for increasing the quality of Mac use. The company’s CleanMymac is one of the best-selling Mac-cleaning software available.

http://www.depositphotos.com/

http://www.grammarly.com/

http://www.invisiblecrm.com/

http://www.jooble.org/

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Paymentwall with a partly Ukrainian founding team and a major R&D center still in Ukraine, is a global payment services provider for digital content, virtual goods and web services. It features over a hundred payment options that allow companies to monetize their users around the world – especially in the field of games, e-commerce and other verticals. Headquartered in San Francisco, the company is another candidate to go public in the next 3-5 years www.paymentwall.comReaddle creates innovative business and productivity applications for iPhone and iPad. Founded in 2007 in Odessa, the company has more than 30,000,000 downloads. Millions of clients use such Readdle apps as Scanner Pro, Documents, PDF Expert, Calendars 5 and Printer Pro on a daily basis. www.readdle.com

StarWind Software is a leading provider of software-defined storage for Microsoft Hyper-V and Windows Server 2012. Founded by Ukrainian entrepreneurs, the company now has offices in the United States and Ukraine; today its customers number more than 30,000 worldwide; Including SMBs, governmental and educational institutions and Fortune 1000 companies. www.starwindsoftware.com

Together Networks is a leading social and online dating business in Europe. With over 110 million users worldwide, it operates across four continents. The service operates with casual dating websites main part of which previously belonged to Cupid PLC, a public company founded by Bill Dobbie and Max Polyakov in 2005 and acquired by Grendall Investments in 2013. Its workforce now includes hundreds of employees based in Dnepropetrovsk, Zaporizhzhya and Kyiv. www.togethernetworks.com

ZeoBIT specializes in computer security software and internet security. Founded by Slava Kolomiychuk in 2006, today ZeoBIT is world known for the bundled utility software called MacKeeper, the multifunctional software that combines 16 individual applications for Macintosh computers. ZeoBIT has a management headquarters in the US and partnership offices in Europe and Asia. www.ZeoBIT.com

http://www.paymentwall.com/

http://www.readdle.com/

http://www.starwindsoftware.com/

http://www.togethernetworks.com/

http://www.zeobit.com/

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JED SUNDENSENIOR PARTNER

Founder and CEO of KP Media which was first Ukrainian technology company to

complete an IPO.

Oversaw launch of Bigmir.net, leading Ukrainian portal, and

Korrespondent.net, leading Ukrainian news site, top 500 global sites.

Successful investor into Ukrainian and foreign internet startups.

MANAGEMENT TEAM

CANYON TECH VENTURES

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ANGUS ROVENSENIOR ANALYST

Senior tech equity research analyst for

$600M growth-oriented TMT group at BAM (AUM

$6bn)

Oversaw investments into leading tech companies in finance, ecommerce and enterprise software

Senior tech equity research analyst for

$600M growth-oriented TMT group at BAM (AUM

$6bn)

Co-founder of US-based e-commerce

startup.


MANAGEMENT TEAM

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DMITRIY MESCHERYAKOVCHIEF FINANCIAL OFFICER

10 years experience in Private Equity and Investment Banking

in Ukraine.

Extensive experience in technology, real estate, finance and pharmaceuticals.

Raised over $200 M in equity and debt financing.


MANAGEMENT TEAM

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INVESTMENT COMMITTEE

TODD KIMMEL

MANAGING PARTNERMONTAGE VENTURES

EDWARD SHENDEROVICH

MANAGING DIRECTOR KITE VENTURES

ARTHUR MCCALLUM

DIRECTORKAZIMIR PARTNERS UKRAINE

Oversees Silicon Valley-based VC Fund focused on Seed and

Series A investments into technology and internet

companies concentrated in financial, healthcare and e-

commerce.

Kite Ventures is a global venture investment company

specializing in internet and technology investments. Kite

Ventures was founded in 2009 and has invested over $250M across 20 portfolio

companies

Oversaw Kazimir Ukraine Convergence Fund, AUM of

USD 140 M and has extensive experience in PE and Fund

Management in CIS countries.



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SUMMARY, TERMS & CONDITIONS

Entity OG Solutions, (British Virgin Islands)

General Partner Canyon Ventures (“CV”)

Tenor 7 Years, extendable maximum of 2 years1 Year at a time at the discretion of the General Partner

Target Size $50 Million

Subscriptions Minimum $ 500,000.00

Management Fee 2.0% per annum

Expenses Fund will bear all organizational, operating, due diligence and transactional expenses, up to 25 basis points of invested capital.

Performance fee 20% per annum, subject to high water mark

Custodian ING Bank

Legal Counsel Walker (Cayman Islands)

Administrator Apex

Auditor Deloitte

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CV HOLDING STRUCTURE

OG Solutions

(BVI)

Canyon Ventures

Canyon Tech

Venture (Investment Fund)
